MSC Industrial Supply Delivers on Same-day Shipping

modern system report
MsC industrial supply
delivers on same-day shipping
I
T
n the age of the Internet, where
price comparisons are a mouse click
away, customer service offerings
have become a competitive weapon
for many direct-to-consumer businesses. Just look at how Amazon
changed the game by offering free
shipping.
While it may not receive as much
attention, the ability to deliver on
customer service is a competitive
weapon in the business-to-business
space as well. In fact, same-day
shipping has been a cornerstone of
MSC Industrial Supply Company’s
approach to beating the competition for years.
Based in Melville, N.Y., the distributor of industrial supplies to
durable goods manufacturers built
By Bob Trebilcock, Executive Editor
D
its market-leading position with
a simple promise, explains Doug
Jones, executive vice president of
global supply chain operations:
“We’ll ship your order the same day
you place it or send you a cash-back
guarantee.”
Jones, who has to sign those cashback checks, says the service guarantee is a reflection of the company’s
commitment to meeting the needs
of its customers. A few years ago,
however, the combination of rapid
growth and changes in the way customers place their orders threatened
MSC’s model.
“Nothing was broken,” Jones says.
“But as we looked ahead, we could
see that we needed to revamp our
processes to ensure that MSC’s dis-
tribution capabilities would remain
a competitive weapon for years to
come.”
Working with a systems integrator (Fortna, fortna.com), MSC transitioned from a paper-based, pickand-pass order fulfillment process
to an RF-driven process that picks
all of the lines for an order simultaneously and then consolidates
them before sending them through
an automated packing station.
The new solution included:
• A wave-planning software application developed by MSC to prioritize orders according to variables such as ship time;
• High-speed belt conveyor and
narrow-belt sortation to route
cartons through the facility;
Wave planners (inset) build
a wave of orders based on
activity in the building and
when orders will ship (right).
Allen Wycheck/Getty Images
Copyright 2012 Peerless Media, LLC. Reprinted with permission.
Copyright 2012 Peerless Media, LLC. Reprinted with permission.
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• Put-to-light technology to consolidate and pack large or over-sized
orders; and
• Mobile computing and bar code
scanning.
MSC rolled out the solution in phases, starting with its
640,000-square-foot distribution center in Jonestown, Pa. Once a process
proved itself in Jonestown, similar
changes were made in facilities in
Georgia, Indiana and Nevada.
As a result, MSC was able to make
two important changes to its operations.
First, the new system reduced the
order cycle time, what MSC refers to as
its print-to-ship time, from more than
3 hours to about 45 minutes. Print-toship measures the time from when an
order is released from the warehouse
management system (WMS) until it’s
ready to go out the door.
Second, that reduced cycle time
allowed MSC to offer one order cut-off
time for same-day shipping to its customers, no matter where they are located
in the country. It also now offers nextday delivery for orders placed before 8
p.m. ET—at no additional cost.
“We were able to lower our cost to
serve and exceed our customer service
objectives,” says Jones.
I
centers in Jonestown, Atlanta, Elkhart
and Reno. Each distribution center is
in the 600,000- to 700,000-square-foot
size with the ability to scale to more
than 1 million square feet.
Customer service has been the
cornerstone of MSC’s value proposition since the company was founded
in 1941. It published its first catalog
and opened its first distribution center
in 1964. There have been many firsts
since then: MSC was one of the first
distributors to develop a computerized
inventory management and order processing system; one of the first to establish a fully integrated quality assurance
department; and one of the first to offer
one- and two-day UPS delivery.
Growth and diminishing returns
MSC launched its hallmark sameday shipping guarantee in 1991. When
Today with $2.3 billion in annual sales,
the program was first launched, Jones
the company serves more than 300,000
explains, different regions of the counindustrial customers from distribution
try had different order cutoff times. Some regions, for
instance, could place orders
up until 8 p.m. ET while
others had 1 p.m. ET cutoff times. While the varying
cut-off times could be confusing, especially to national
customers with operations in
different parts of the country, MSC was able to make
good on its promise before
the explosion of e-commerce
because orders tended to
come in steadily throughout
the day.
S
“When most of our cus-
tomers phoned or faxed orders in, we would get 45% of our
volume for the day before lunch,” Jones says.
MSC’s old pick-and-pass order fulfillment system worked
fine in that environment. After a call center representative
took an order, it would drop to the WMS. Once a paper pick
ticket was printed, the fulfillment process would begin when
a merchandise selector, as order selectors are called, would
get a tote in a 25-foot-high, narrow-aisle bin storage area
reserved for slow moving items. Working on a man-up lift
truck, the selector would pick any items stored in this area.
Since the average order is three to five line items, the tote
was then passed to an induction area for a tri-level picking
mezzanine.
The inductors would then route the tote to the first
picking zone in the mezzanine where an item was stored.
Following a pick, the tote was passed serially to subsequent
zones until all the items were picked. After the last pick, the
tote was conveyed to the packing area. In all, the process
took about three hours.
“The pick-and-pass method served us well for years,”
Jones says. However, as more people began to order electronically, several factors put a strain on operations.
First, MSC’s business was growing rapidly. Between 2005
and 2012, for instance, the business more than doubled,
going from $1 billion a year to $2.3 billion a year. Some of
that growth was organic, but some was also the result of
acquisitions, which led to what Jones describes as “lumpy
growth.” An acquisition resulted in a sudden jump in business that had to be absorbed into the system.
More importantly, customer order patterns evolved with
the Internet. “Instead of getting 45% of our volume before
lunch, we now get 60% to 70% of our volume between
3 p.m. and 6 p.m.,” Jones says. “If you take an order at 4:45
p.m. in a region with a 6 p.m. ship time, that three-hour
cycle time is a problem.”
To cope, Jones says, MSC operated with more brawn than
brain, adding people to pick zones to keep up with demand.
That approach got the orders out the door, but at a cost to productivity.
In 2005, Jones realized his processes needed to change.
That year, MSC launched a process improvement program
with three goals:
• Increase operational capacity: MSC needed to increase
its throughput capacity during peak hours so it could stop
throwing more labor at the problem.
• Reduce cycle times: To meet the company’s ship guarantee, it had to reduce cycle times. In turn, that would
improve productivity and protect MSC’s service model.
• Maintain quality: Since MSC primarily serves manufacturers who rely on the distributor to keep their lines running,
orders not only have to be timely, they have to be accurate.
Jones insisted that changes be made with no negative impact
on quality or customers.
“We have no tolerance for errors,” Jones says.
Copyright 2012 Peerless Media, LLC. Reprinted with permission.
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Breaking waves
From the outset, MSC rejected a Big
Bang in favor of a phased-in approach to
improvements. Changes were made in
four phases over the next few years, starting with Jonestown. The team likened it
to waves hitting the beach, one at a time.
The first phase was to replace the
paper-based picking system with an
RF-driven system. In addition, MSC
developed a wave management software application in-house that allowed
managers to select and prioritize the
orders that were going to be filled. “In
our old system, a pick ticket was printed
as soon as a new order was received in
the warehouse, regardless of when it
shipped,” Jones says.
With the wave management system, orders dropped into an electronic
queue. A wave planner acts as the quarterback for the system, building a wave
of orders based on criteria such as when
the orders will ship, which pick zones
are over-worked and which are underworked depending on the time of day.
Instead of printing pick tickets, those
orders are now distributed electronically to handheld mobile computers,
creating a paperless, eco-friendly environment. Picks are verified by scanning
bar code labels.
In phase two, MSC brought in a systems integrator to replace the pick-andpass picking method with a discrete
order picking system. The idea was to
not only further reduce cycle times, but
streamline the use of labor.
“We used to have 15 people working in the order induction center just to
determine how to route totes through
the mezzanine,” says Jones. “That was
labor with no value-add.”
The system integrator implemented
a discrete picking and consolidation
system. Instead of picking and passing
totes from one pick zone to the next
to fill a multi-line order in a series of
sequential picks, each line of an order
is now picked independently and simultaneously to a tote in whatever zone
the item has been stored. Once a merchandise selector picks an item, affixes
a tote arrives at the packing
station, an associate verifies
the contents of the order and
places them in an open top
shipping carton. From there,
the automated packing system
drops in a packing slip and any
other collateral material, adds
transport packaging, right-sizes
the shipping container and
automatically seals a lid on the
carton. From there, it is conveyed to a top applicator for the
shipping label and then on to
the shipping area.
“We started in Jonestown,
and then took the new processes to Atlanta, Elkhart and
Reno,” Jones says. “We’ve been
going building by building.”
The process improvements
have been substantial. In addition to reducing cycle times
by 75%, MSC has seen a sigAfter picking, orders are consolidated and
nificant
improvement in proassembled and then sent to a packing area
ductivity.
The 15 inductors, for
where they are prepared for shipment.
instance, are now involved in
other jobs besides routing totes.
a pick label and scans the item into a “We have the same number of distritote, it is routed by a warehouse control bution center associates today to hansystem to a centralized order consolida- dle more than $2 billion in business as
tion area with 256 accumulation lanes. we had in 2005 to handle $1 billion,”
Once all of the lines for an order have says Jones.
collected in one of the lanes, a light sigJust as important, the new capabilinals an associate to aggregate the items ties have enabled MSC to improve on
into one tote and convey it to a packing its customer service promise and drive
sustainability benefits.
station.
“As a result of the success of the
With the new picking process, MSC
was able to replace an inefficient roller system, we moved our customer cutconveyor system and push diverts with off time to 8 p.m. ET throughout the
a high-speed belt conveyor. A saw tooth United States,” says Jones. “We could
merge combines the incoming conveyor never have done that with a threelines into one line that feeds the totes hour cycle time.” Jones adds the other
to the order consolidation area. Narrow benefit is that it enabled MSC to
belt sorters divert shipping containers have a more environmentally responsible solution to packaging—from
to the right shipping lane.
In phase three, MSC launched a printing less paper to moving from
lean warehousing initiative to optimize styrofoam to air pillows, leveraging
its labor force around the new materials reusable pallets and more. “For more
than 70 years MSC has prided itself
handling system.
To round out the project, MSC on exceeding our customer expectaimplemented an automated packing tions and being a responsible corpoprocess earlier this year. Today, when rate citizen,” he says.
Pick and consolidate
MSC’s new order fulfillment system rapidly picks and consolidates
multi-line orders for quick cycle times.
A
s part of its redesign, MSC
Industrial Supply transitioned
from a traditional pick-and-pass
approach order fulfillment system to a
more streamlined solution. Now, the
different pieces of a multi-line order are
picked simultaneously and conveyed
to a consolidation area where they are
married together. The result is a highly
efficient process that has dramatically
reduced cycle times.
Receiving: MSC receives (1) sev-
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Jonestown, Pa.
size: 640,000 square feet
ProdUCts: industrial supplies
tHroUgHPUt: 40,000 lines per year
assoCiates: 350
sHifts Per day/days Per WeeK: 3 shifts
per day, 5 days per week
9 Order
Packing
Shipping
11
consolidation
7
Shipping sorter
10
8 Merge
6
Tri-level mezzanine
4
Reserve
storage
Small parcel
5
3 processing
Slow moving
items
4 Reserve storage
2 Receiving processing
1
Receiving
Copyright 2012 Peerless Media, LLC. Reprinted with permission.
Copyright 2012 Peerless Media, LLC. Reprinted with permission.
22
eral different types of shipments,
including small parcel, less-than-truckload and truckload shipments, and
ocean containers. Floor loaded cartons
are palletized and then moved with lift
trucks to a receiving processing area (2).
There, the contents are verified against
a purchase order. Small parcel shipments are processed in a separate area
(3). Once the material has been verified
and entered into the warehouse management system (WMS), it is ready to
be put away into storage.
Storage: Newly arrived product
is putaway into storage in the reserve
storage area (4), the slow moving items
area (5) and the tri-level mezzanine (6).
Product destined for the mezzanine
and slow moving area is put away after
hours so as not to interfere with order
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fulfillment processes. Cartons travel by conveyor and the warehouse control completed first. The associate marries
conveyor from the receiving area to a system routes it to the next stop. Single the items for an order into just one tote.
sortation area. There, associates build line orders are conveyed directly to the Once all of the items for that order are
pallets and carts with product that will packing area (7). If the tote is part of in a tote, it is conveyed to the packing
be stored in those areas. In the slow a multi-line order, it is conveyed to the station (7).
moving SKU area (5), product is stored consolidation area (9).
Packing: Both single-line and
by associates on man-up lift trucks.
• Tri-level mezzanine: Merchandise multi-line order totes ultimately arrive
The associate scans the bar code label selectors perform similar steps in the tri- at the packing station (7). There, a
on a carton and on a storage location to level mezzanine (6): after scanning loca- packer verifies that all of the items
confirm the putaway in the WMS.
tion and item bar code labels, the system required for the order are present. The
In the mezzanine area (6), cartons generates a new pick label for shipping. packer then places the items in an open
are placed on carts that are transported The item is then scanned into a tote that top shipping carton for that order. Next,
to the right level for storage. Associates is placed on a takeaway conveyor and an automated packaging system adds
follow the same process to confirm the merge (8) in the mezzanine. The tote is the packing slip and printed marketputaway in reserve storage (4).
then conveyed to the packing area (7) or ing materials, adds protective transport
Picking: The picking process is to the order consolidation area (9).
packaging such as air pillows, seals the
initiated when orders drop from the
Order consolidation: Totes with lid on the carton, and diverts it to the
order management system into an order single line orders are conveyed directly right shipping lane (10), depending on
queue in the WMS. At that point, an to the packing area (7). Multi-line the carrier.
associate referred to as a wave master orders, however, must be consolidated
Put-to-light order consolidaprioritizes the orders based on a variety before they are sent to packing. Totes tion and packing: Some orders may
of criteria. That may include what time arriving from the various picking areas require more than seven line items
of day the order has to ship, whether it’s are merged onto one conveyor line at a or may call for large items that won’t
a hot order or whether the wave master saw-tooth merge (8). From there, totes fit into one tote. Those totes are conwants to balance the work load in cer- are sorted into a two-level consolida- veyed to a put-to-light carton flow rack
tain areas of the distribution center.
tion deck (9). Each level has 128 accu- with workstations on either side of the
Orders are entered into a wave mulation lanes; each lane can hold up rack. The put-to-light area is located
planning software application. Once a to seven totes, representing seven lines under the packing area (7). When a
wave has been built, picking tasks are arriving from seven different areas of the tote arrives on one side of the rack, an
distributed electronically to the order building. A light at the end of the merge associate scans a bar code label on the
selectors’ RF guns, known as merchan- alerts an associate when all of the items tote. Lights on the carton flow rack tell
dise selectors. The system is designed for a single order have arrived and are the associate where to place the tote.
to pick all line items in an order indi- ready for the next step in the process.
Once all of the totes for an order are
vidually and simultaneously and then
Since several orders may be ready in the carton flow rack, a light on the
to marry those items up in a centralized at the same time, a blinking light alerts other side alerts a packer that the order
consolidation area.
the associate to the order that must be is ready to be finished. The packer
• Slow moving SKUs: In
places the items in an open
the slow moving SKU area (5),
top shipping carton and
merchandise selectors work from
it is conveyed to the autosystem suppliers
man-up lift trucks. Once a mermated packaging area (7)
systeM integrator, WareHoUse Control systeM, Wave
chandise selector arrives at a pickwhere it goes through the
Planning and PUt-to-ligHt systeM: fortna, fortna.com
ing location, he scans a location
same process mentioned
WareHoUse ManageMent systeMs: MsC industrial supply
bar code label and then scans a
above in packaging.
mscdirect.com, developed internally
label on the item. That will generShipping: Cartons that
Belt and roller Conveyor: Hytrol, hytrol.com
ate a shipping label that is applied
can be live loaded are connarroW Belt sorters: tgW systems, tgw-group.com/us
to the item or to a package if the
veyed (10) directly into a
lift trUCKs: raymond, raymondcorp.com, Crown, crown.com
item is placed in separate packagtrailer. Other cartons are
ing for shipping. The item is then
conveyed to a palletizing
MoBile CoMPUting and Bar Code sCanning: Motorola
solutions, motorolasolutions.com
scanned into a tote. Once the
station where pallets are
picks in that area are complete,
built for shipping and then
aUtoMated PaCKing systeM: savoye, savoye.com
the tote is placed on a takeaway
loaded onto a trailer. M
Copyright 2012 Peerless Media, LLC. Reprinted with permission.
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